Innovative Methods for Modeling Longitudinal Medical Costs It is projected that health care costs per person would increase from $8,160 in 2009 to $13,100 in 2018, and that total health care costs will account for over 20% of the gross domestic product by 2018. Statistical analysis of medical cost data is becoming increasingly important with the heightened interests in containing the rising health care cost. Medical cost data are routinely collected in billing records of hospitals and claims of health insurance plans (e.g., Medicare, Medicaid, or commercial insurance). The wide availability of such data has motivated the development and application of the state-of-the-art statistical and econometric methods. With technological advances in automated data collection and management, medical costs are now often gathered at regular time intervals (e.g., daily or monthly), creating a longitudinal data pattern. The objective of this study is to develop and disseminate a number of models to analyze longitudinal medical costs data. There are five aims in this grant. First, we will expand the currently available econometric models of medical costs to longitudinal data and compare the performance of these models. Second, we will explore the use of more flexible functional forms of covariate specification in modeling longitudinal medical cost data. Third, we will extend the above models to jointly analyze medical costs and multiple health outcomes (e.g., survival, or quality of life), and study the effect of risk factors on them simultaneously. Fourth, we will apply hierarchical models to address the clustering effect in modeling longitudinal medical cost at different levels, e.g., health plans, families, and members. Finally, we will develop ready-to-use software to facilitate the practical application of methods developed from the proposed study. In addition to testing the performance of the proposed methods in simulation studies, these innovative methods will be applied to empirical case studies using three real-world databases: Clinical Data Repository (CDR) at the University of Virginia (UVA) Health System, Medical Expenditure Panel Survey (MEPS), and the SEER- Medicare databases. We expect the application of the proposed methods to these case studies will substantially advance our understanding of the influence of demographics, physician practice patterns, diseases, and health policies on the cost of medical care.